tv Squawk Box CNBC June 19, 2018 6:00am-9:00am EDT
good morning welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen, andrew ross sorkin is reporting live from cannes, france today's top story, that global market selloff we've been watching u.s. equity futures at this hour are indicating if we were opening here, we would be down 340 points s&p futures are off by 30. the nasdaq down by 80 points at these levels, if we were to open here, the dow would be going negative for all of 2018 at the open. the dow and the s&p 500 are on track to give up the majority of june gains as well probably worth noting as recently as yesterday that june was on track to be the best month for the market since january. we'll look at all of this and see how things are adding up it's happening because of additional tariffs from
president trump. let's look at treasury yields. at this point, you are watching the ten-year note yielding 2.877% extreme pressure put on yields >> got a lot of warped thinking about this let's go through the numbers stocks selling off in asia and europe complete team coverage from around the world joumanna bercetche is standing by in london let's begin with nancy hungerford in singapore. give us some percentages, nancy. we are down about 1.4% i figure the asian markets go down 3%, then we're winning, aren't we? i don't know >> depends on which asian markets you want to focus on we saw broad based selling if you want to talk big numbers, look at the greater china markets. it may not surprise you that the brunt of the selling took place
there. keep in mind, too, these markets were on holiday yesterday. they did not get their first chance to react to the first round of tariff threats from president trump, that $50 billion number, now reacting to additional tariffs on 2$200 billion of goods china now fighting back. that did see a further weakening of indices here. the shanghai composite off 3.8%. shy of the last selloff in early february the shenzhen is the worst performer off almost 6%. the tech heavy index, explains a lot since tech is at the heart of the trade concerns coming from the united states this sector is seen as vulnerable to threats out there. the hang seng lower by 2.8%. it wasn't all about the greater china markets. the nikkei 225, i mentioned on the session lower by 1.8%. look at the chart here
that is the lowest level in about 2 and a half weeks we did see that safety bid into the yen, which tens to weigh on expo exporters in japan over to joumanna >> the mood in europe is not that different it's a sea of red as far as european equities are concerned. the main underperformer is the xetra dax, down 1.3% just to give you an idea, in two days alone the german index is down about 3%. that gives you an idea of some of the turmoil back home that is permeating there as far as angela merkel's future is concerned. an out-performer is ftse 100, still down 0.6%, but that's aided by the weaker currency
ftse mib down as well. some of the sectors that are underperforming are those that are most exposed to trade. basic resources down about 2.3%. technology down 1.6% autos down 1.6%. oil is trading heavy ahead of the opec meeting back to you. president trump is upping the pressure on china with more tariffs. eamon javers joins us from washington with the details on this latest move >> the president announced this yesterday. he made the decision with his advisers yesterday, he put out an e-mail last night with the president's statement. the president explained about the previous round of tariffs and the chinese retaliation. he said he didn't like that. he said therefore today i directed the united states trade representative to identify 2$200 billion worth of chinese goods
for additional tariffs at a rate of 10% after the legal process is complete these tariff also go into effect if the chinese don't change their practices and to forward with their new tartarif. if china increases its tariffs yet again, we will meet that action by pursuing additional tariffs on another 2$200 billion of goods the president is thinking and his advisers are thinking that they had no choice after the latest round of chinese retaliation to go forward with these tariffs. they also feel it's not that big of a deal for the u.s. economy they have cited in the past the $19 trillion size of the u.s. economy versus the size of these tariffs, relatively small.
chinese economy is relatively in the same boat. also they feel strongly that the united states has much more to gain and the chinese have much more to lose in any trade conflict that's because the chinese import about 5$505 billion worth of goods from the united states. the united states imports 505 billion from china the chinese import about 1$130 billion from the united states so they feel this 2$200 billion number is not a number that the chinese can match. they only have about $80 billio left to impose additional tariffs at this point. the chinese can't impose tariffs on a scale that the united states can so the question is what other actions could the chinese take beyond putting tariffs on all 1$130 billion worth of goods they're importing? what else could they do? that's an open question at this point.
you have to expect some retaliation from the chinese side that's the thinking this morning, the chinese have more to lose than the u.s. does, and it's not that big of a deal for the u.s. economy >> in the past, the way of thinking has always been you have to leave the chinese a way to negotiate and let them save face i know we're throwing standard operating procedures out the window, is there a way both sides can save face? the more escalated this gets, the harder that becomes. >> you're right. the president is not about saving face. he's about gaining face for himself. the question is how does that play out here? if you get in a cycle of retaliations, is that endless and does it have an effect on the overall economy? the other question is what other measures can the chinese use to retaliate? talking about that imbalance if you have 5$505 billion of goods that you can continue
ratcheting up the tariffs on, you're in good position if it's just about tariffs the chinese can only go up to 130. could they stop buying treasuries could they do something in terms of making life difficult for american companies that operate overseas could they increase the tariff rate, not just the dollar amount of goods that are being imposed tariffs on but the rate on those tariffs. those are a lot of options that the chinese have now we'll see what arrow they take out of their quiver to response, but it's clear there is a response coming. >> we will talk about a lot of this stuff a couple of thoughts we're down 1.4% today. china is down 6. nobody likes that. it's bad but we'll see whether that continues. we've had people coming in saying the economy is too hot.
the fed is not acting -- i don't know, it's not acting because of normalizing but it needs to slow the economy. i don't agree with that at all, with inflation running at 2% and rates this low at 7, 8, 9%, where you have the wage price spiral, i don't believe that, but trump has 40% on the stock market in terms of appreciation to work with. rates have already gone down on this i can almost make the case, if there was time to try to correct the inequities of the past in terms of the way we have been taken advantage of by china, now may be the time. these two guys we'll talk to bring up something important that is the election so trump has to think about if
china goes to the farm belt and to his base to retaliate, those are the people who will be feeling the pain that's where there could be a problem. >> there is no question, "a," that the administration does agree with what you said, this is the time. they feel there's a lot going on in the u.s. economy that's strong, much broader than the trade situation, jobs, stock market, all of that have been good so if you're going to do it, do it in this type of environment you're also exactly right, the chinese are smart about this they can figure out how to sort of poke into the u.s. economy in ways that hurt the president's political base in ways that are designed to make him feel political pressure to back off of this. the problem is for the chinese that the president is not the type of guy who likes to back off. he doesn't back off on a lot of things any public perception that he's backing down will be untenable to this white house. how do you get out of this cul de sac is a fascinating question >> i wanted to give you some of those things you can even quote me with those
briefing room eco chamber types. you can hang it on me, that's something for them to consider it's hard for anything to get in there. that's a small room. >> the white house briefing room >> it's oppressive >> yeah. it can feel that way it can i was there, it was empty and it was oppressive >> when are you coming down again? we'll have to have you >> not a good experience >> my feeling every day. you are preaching to the choir >> i felt stockholm syndrome i felt some tds coming on, trump derangement syndrome thank you. >> sure. >> ian shepherdson joins us and sayed hyder also joins us.
i shouldn't have told you guys what i was going to talk to you about. >> gave them time to come up with responses so, first i saw some of your comments, and that is that the people talk about this hurting the election in november but trum's base actualp's base s doing. >> i think there's support in the heartland for this kind of aggressive trade policy. it's likely to have little effect on u.s. gdp growth. even if the chinese retaliate against the farm belt, the u.s. can pass a farm bill to help the farmers out to offset some of those effects. the u.s. is in a stronger negotiating possession than the chinese. >> ian, i think about it we depend on china for cheap
goods. i can understand how we're the biggest economy in the world, and it's hard -- >> for now >> it's hard to say, okay, i will trade amongst europe. it's hard to do that your worry is the elections will cause us to back off a bit >> yeah. we got two strong guys who don't like to lose face and like to push the other guy around. one has to face elections, one doesn't. that's some sort of counter weight to the fact that we import more from china than china imports from the u.s the danger is as the midterms approach, we end up with a significant hit to u.s. consumers. and they begin to react at the polls. >> are there individual republicans in the senate or in the house that are at risk donald trump's numbers may be going up, but are there
individual members of the congress who might be at risk? >> of course the chinese know this well it's not an accident they're targeting farm states or manufacturing states or looking at places where trump did well, especially when those places are marginal like wisconsin. those tariffs will be targeted there. they will soon run out of u.s. goods to target, because the trade balance is so imbalanced, then they may try to disrupt activities of u.s. companies operating in china we could maybe find alternative sources to get cheap tvs, but disentangling those deep supply chains that we have built up over 30 years, that can't be done quickly >> it's not just that, also the nationalistic fervor they have been whipping up already in china for chinese consumers to maybe put pressure on them 25% of apple's revenue comes from china
if this anti-american sentiment pops up, does that put some of our biggest technology companies at risk? >> the chinese have ways besides tariffs to affect u.s. sales in china like they can slow walk import approvals and things like that with u.s. companies they have to be careful they spent two years trying to stabilize the renminbi they've been curtailing foreign direct investment by chinese companies elsewhere in the world. i'm not sure they want to reduce foreign direct investment into china by being aggressive with u.s. companies >> is there anything to the notion that the u.s. economy is too hot right now? and this is a way to cool it off without raising rates, maybe to accomplish something long-term the guy -- seth, who was in the
obama administration they're worried about gdp. he is saying the fed has to go up just slow the economy. wayne gains would be good. they have been absent for so long we don't see a wage price spiral that is causing us to -- remember volker? he had to cool off the economy we are not there now i want the economy to keep going. if you blink it will be at levels we have not seen since the '50s is it good news isfinally bad numbers? >> kind of these numbers are not g but they' -- not good, but they're picking up if you don't act now you have trouble down the road. the problem with the trade
thing, it's less predictable if it spirals into full-on prolonged trade war, you are looking at tariffs on everything we import from china, maybe a 1$100 billion hit to the econom, that's real money. that becomes an extra burden, it annoys consumers somebody has to pay this 1$100 built on that's everyone around it's a significant hit, not yet, but these guys don't want to blink. >> you look very -- >> with respect to the unemployment rate, unemployment will get down to about 3% by early next year. while people don't believe in the phillips curve anymore, you start seeing very sharp steepening of the phillips curve effect in some places. there's good reason to think the phillips curve is just dormant, not dead if the fed doesn't keep raising
rates for now, they'll get themselves in a box eventually with all the risk off going on, you can buy treasuries, but you don't want to buy the front end of the curve here. they'll keep raising rates in the u.s. >> gentlemen, thank you. we'll watch every day, every hour, every minute. tesla's ceo elon musk is accusing an employee of sabotage he claims an employee tweaked code on internal products and sent company data without authorization. the e-mail says there may be considerably more to this situation than meets the eye we need to figure out if he was acting alone or with others at tesla and if he was working with any outside organization cnbc reached out to tesla for comment. tesla declined shares are moving lower in the
premarket. down by 1.75%. let's head to -- we'll go to cannes oh yeah who is that behind those foster grants are you in cannes or cannes? >> are we convinced we're calling it cannes today? not calling it cannes. >> look at that. you dog. >> it's beautiful here now -- i was thinking he has to take a long plane ride now i'm jealous. >> are serious things going on in cannes. joe, since i know you're headed this way -- >> yes yes. >> man of the world, euro right now is 1:is 1.15. >> you have to love that except it's company money, you tonight
care >> at the moment it's company money. but i checked for you, as i got off the plane. i thought this would be the most important conversation that we're having very little conversation about trade or where the markets are headed the real conversation is about the media landscape, the merger landscape. on my flight over ken orletta was on the plane, katie couric, it was like a media conversation -- like an overnight flight of media mavens a lot of conversation about whether google or facebook should get broken up the beach, behind us, you can see what's going on.
there's all of these tents facebook has a tent. youtube has a tent apparently they make you check your privacy settings, which sort of illustrates the point of what's going on in the world and how facebook is trying to change just a bit that's what's going on here. we have a huge lineup of guests. you saw evan spiegel here yesterday with our crew here today. and we will have bose st. john, who was at uber for the last few years. she just joined endeavor, the old wme. used to be at apple, used to be at pepsi worked with beyonce on the super bowl knows all things marketing joanna coles will be later with us later a huge day ahead tomorrow.
>> what's the temperature in fahrenheit >> temperature, guys what do you think? >> 85? 90 >> sally is going with 85, 90. >> you're wearing a jacket i would go tie, no jacket before i go no tie and jacket or no shirt. no shoes, no shirt, no problem >> no shirt. >> don't do that >> you know -- yeah. any way, that's what's going on. we'll see you at the top of the hour >> in cannes see you at the top of the hour thanks, andrew when we come back, continuing coverage of the global markets as investors weigh the impact of a possible trade war with china you can see the futures are down, off the worst levels, believe it or not. down by 305 points for the dow
♪ president trump making space the next frontier of national defense. morgan brennan joins us in chairs today with the story. saw a lot of tweeting, trending. >> yeah. >> the name maybe? the force be with you, space force. >> it's a very dynamic name for sure let me say, this is exciting i never sat in welcome to chairs >> we don't just invite anybody to chairs. >> at the national space council meeting president trump
directing the pentagon to begin the process to establish a space force as the sixth branch of the u.s. armed forces. >> that's a big statement. we are going to have the air force and we are going to have the space force separate by equal. it will be something >> the president floated this idea since march but the ball is in motion. dana white saying the d.o.d.'s policy board is taking the issue up they say working with congress this will be a deliberate process with a great deal of input from multiple stakeholders that's the key here. the president can advise or direct the joint chiefs of staff to do this, to take this up. it will take congress to write the law and carve out funding.
this will be a tricky. the air force controls about 90% of all space funding they argue you would create more bureaucracy, this could put current missions at stake. complicate those you will hear more and more about space as the next war fighting domain. >> what's the argument for making it a separate branch of the military it puts a priority on it >> if we were going to war with somebody, most notably russia and china, which have been developing webb weapons to hobbu satellites, it would be the first shot in space to take down many u.s. military operations and the u.s. economy so much of what we do -- look at
gps. it's done from space, and we don't necessarily have the capable cap capability to protect ourselves. in terms of a space force this would be years away. there's a lot of unknowns and questions. lockheed martin voiced support and noted they had been involved in space activities for a long time the usual suspects would benefit from this, lockheed, boeing, ratheon. >> the age-old arguments re-emerged yesterday we don't have clean water in michigan why are we going to space? that's been around since the beginning. if it was purely to satisfy sort of the yearning to know, is it
still worth it mankind has to move forward, but when you put it in terms of gps, warfare, not lose ground -- when you put it that way, it doubles the rationale for pushing back on those arguments we can't solve everything here before we try to do that we have to do both >> i think it's all interconnected also when you talk about something like tariffs and potential trade wars with china, when you talk about high-tech, jex it comes back to capability. there was a report about the hacking of a navy contractor by china for some trade secrets it's a key part of that conversation that doesn't get talked about very much >> all right there will always be people trying to do bad things and take
over james bond will never -- that movie franchise will never go away there's always going to be somebody evil. >> the evil guy just changes >> but they're all evil. >> dr. evil. or him exactly. let me tell you about a story that got my attention. joe, this is for you >> you picked this >> i did there was a tweet from an indiana stat trorait troo statet viral. this is a vehicle he pulled over for driving too slow and driving too slow in the left lane. it went viral because among others graham rael said this guy is my hero the speed limit was 70 and she was going under that in the left
lane >> i don't have a story, i want to tell you something we found out yesterday. >> what? >> new jersey has some big -- don't know if i want to say this on tv. new jersey has some big funding problems >> you just found this out. >> one way they'll try to deal with some of it -- >> more tickets? >> yes >> you're in trouble >> i saw information if you're not carrying all the information you need, it used to be like $50, it goes up to $190 or something. these guys are expected to give out a ticket every ten minutes 5 miles over, it's supposedly fair game now. i'm just hearing about this. >> as a result, you're driving carefully? >> yeah. coming up -- governor
murphy, you think this is true >> sounds plausible. >> i didn't want to tell anyone about it people know now. >> because you wanted to hide. >> i don't know if it's true i'm warning people like when you flick your lights, you see a cop sitting there -- >> waze tells you now about police officers. >> that's also going up, if you're on your phone >> oil prices are dropping ahead of this week's opec meeting. what this tells us about global growth is next imagine traveling hassle-free with your golf clubs. now you can, with shipsticks.com! no more lugging your clubs through the airport or
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dow futures pointing to a 300-point drop at open oil prices also falling this morning with opec leaders heading to vienna for a major meeting. brian sullivan joins us from london with a preview. you're headed to vienna, brian are you? >> yes, austria, not virginia. >> i am, too when are you coming back i can make it five saturday night, a week from sat what day is it this saturday. yeah i can add -- are you going to be there saturday night >> i will not be there saturday night, but if you are i may change my plans. >> i have a great restaurant wienerschnitzel with a view of st. steven's
rooftop. >> send it to me i look forward to hearing about it we might still be locked down at opec meeting if things don't go well it's supposed to be contentious. you guys hit on this global market selloff we all wondered would this change opec's calculus they're in the middle of a 1.8 million barrel a day cut two years ago you had $35 oil. these cuts seem to be working a bit even as the u.s. increases output russia, which is not a part of opec and saudi arabia, they want to basically end the production cuts raise output by 1.5 million barrels a day. that would go back to what they were doing iraq and iran, they're aligned together along with venezuela to oppose production output probably because they can't. they have problems "b," they want even higher
prices you have saudi arabia and russia on one side. iraq, iran and venezuela this sounds like a motley group, but combined they have over 8 barrels a day of capacity. they have some power those are the counter veiling for forces that could create tension. >> thank you joe is sending you information on the cafe now. >> is it cafe -- >> don't hurt yourself that was a good pronunciation. no it's not vienna is a great place. the euro is 1.15 drink up it's awesome >> thank you >> joining us now to talk more about this is matt smith
matt, brian laid it out nicely about how the two sides are shaping up you can look at it and say it's not that saudi arabia and russia don't want higher prices for oil, but they each have their own needs. i guess russia is needing the money for its economy and saudi arabia is helping us out a little because they don't want iran back in because of that deal, the iranian deal being cut off by president trump is that how we wound up with this split from answ absolutely you hit the nail on the head there. we have opec's version of don't fight the fed here you have the saudi oil minister who has signaled to the market what will happen the last year and a half, over the last couple of weeks we had rhetoric out of him saying we'll see a mod ral increa increase -- moderate increase in
production what has been interesting is they have a situation where sanctions are being placed back on iran. at the same time we're seeing saudi increasing exports they're up by 400,000 barrels a day versus may's level so iran is getting pushed out of the market not only is that good for saudi because they're political adversaries but also filling that gap in terms of production. this is much more about politics, it would seem, as opposed to prices. >> russia and saudi arabia are the big steamroller guys, they can decide some of these situations if they are the ones who get their way and we do see an increase in production what does that mean for oil prices from here >> the reason they are looking to boost that production is because they believe that the market is somewhere close to balanced but the thing is as well that iran's supply will also come off
the market because of sanctions. there will be a lack of investment, lack of technology, lack of materials in terms of the oil industry we'll see that reflected through lower exports to europe. at the same time we have venezuela continuing to spiral out of control that's an issue as well. there is offset in terms of production losses at a time where we see the market move closer to balance. so we will test the waters at the same time saudi knows it is sticking it to iran if prices move from here >> thank you for your time >> thank you >> let's get back to andrew in cannes looking good those are not coming off, the shades >> we could take them off. >> what kind are those some kind of designer --
>> no. these are just -- these are w h warbees. i could do some aviators later i have a mix we'll see how it goes. i have somebody who doesn't need sunglasses that we'll talk to. i just parachuted in now i don't know a lot about what's happening on the ground. julia boorstin knows what's going on here. she's here without sunglasses. >> squinting into the sun. here in cannes everyone is talking about facebook, which dominates a huge piece of the digital ad business and everyone is talking about what is next. facebook has a big beach setup behind me and they're pretty much owning up to their mistakes and talking about the changes the company is making. front and center are stations to
do a privacy checkup to your account. we spoke to michael cason who said facebook is responding to demands. >> if brands have transparently they'll be comfortable if they don't, if there's more opacity around data sharing, we'll continue to see a true threat to that so-called duopoly. >> we also spoke to unilever's cmo who said his company stuck with facebook throughout the data scandal >> i'm satisfied with the progress they're making. we're not where we need to be yet. they know that, i know that, you know that. it's a big company it's making big changes. >> the broader issue of brand safety is the issue across cannes media companies are hoping to
steal back ad dollars from digital. i remember being here last year, even before the cambridge analytica scandal broke, there was a remarkable tension between the advertising world and facebook is it -- it doesn't seem like it's that much better this year or it shouldn't be better this year, but it seems like it might be >> last year we were talking about youtube and brand safety issues there were about 300 advertisers who were upset that their ads were put next to inappropriate content. the reality is that facebook and google dominate the vast majority of digital ads. if you want to reach consumers on digital you have to work with facebook and google. people are curious to see who the third biggest player will be there was talk about amazon being a rising force, and then there's talk about snapchat, spotify, twitter getting attention. when we come back, a lot more on the global market
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siver security research company rapid 7 releasing its exposure index topping the list of most vulnerable nations to cyber attacks, the united states with us is the rapid 7 ceo we're going to talk about this a lot today. what's your biggest vulnerability? what i get scared of is the power grid, i guess, or maybe financial institutions >> absolutely. you always want to start with things that affect life and safety so i completely share the fear of the power grid, of stuff happening to our cars and vehicles >> i don't want my wi-fi to go down in the house. i don't know if it's worse than that but faa, i can -- you know, this can get scarier than a zombie ap apocalypse quickly >> it really does go from things
that are nuances to things that actually cause loss of life. that shares the concern. specifically what we're looking at in our research is what's the exposure of all the devices connected to the internet all over the world and what we find is there's still a shocking number of highly exposed devices connected to the internet all over the world right now. >> that doesn't surprise me at all. >> it doesn't. but it shows sort of, like, even though we actually talk about it, we actually know there's cyber security problems, we've got it built into the ecosystem to address the issues. and because of that, we're still susceptible whether you think about our power grid, our personal devices, the technology that we allow for privacy. we're still susceptible. >> nuclear codes aren't on the internet i worry about -- what's the most dire thing that you can think of because the most mundane thing is pretty frightening. i mean, the sum of all fears, that was the movie
>> sum of all fears was a classic both movie and a book there. i would say that the -- when you think about the dire things, it is things that not just affect life but mass of life. you think of the focus we have right now on critical infrastructure the things we actually use to make not just sort of the keep planes from falling out of the sky. but if you think about the power grid being down, our logistics infrastructure those things are really critical >> where's the fault is it with consumers with business? the government or all of the above? >> it's all of the above this is a massive societal issue. we've collected a decades' long history of inattention to cyber security and we are investing to catch up we're just doing it disjointedly and inconsistently the thing i would say is there is hope. we are seeing improvement in the way that both nations and organizations address this but we have a very, very large
backlog that we're catching up on right now >> i can't live -- i don't have any maps in my car anymore and i go anywhere now and i figure, i know the shortcuts with google maps >> i used to carry an atlas with me all the time. >> you know when you're going to get there. you're which -- oh, my god, i could go that way but i'm not going to because -- that's just a mundane simple little thing and there's probably a thousand of those things i'm dependent on >> last time the power went out in our neighborhood, some of the moms were saying they were locked out of their houses because, yeah, they were -- >> when sanger comes on, he says election hacking >> it's become such a deep part of our society technology is everywhere >> thank you >> thank you when we come back, global markets under pressure this morning. tepridt umpping around the world afr esentrp fires back at beijing continuing coverage when "squawk box" comes back.
a trade war with china front and center for the markets futures sharply lower on fears china will strike back the latest on the market move and your money is straight ahead. hacking america. cyber warfare is a growing problem for corporate america and society. we'll take a look at the rise of cyber weapons and how they are transforming geopolitics with david sanger plus we're live in cannes. the new role after leaving uber and how she's looking to help entrepreneurs grow their businesses as the second hour of "squawk box" begins right now.
live from the beating heart of business, new york, this is "squawk box. >> good morning, everybody welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew is in cannes, france, this morning we'll talk to him in a minute. we'll have more on the trade war escalation with china. you can see the dow futures down 318 points nasdaq down by 78. we're going to talk all about this and also give a look at what's been happening in asia as their market's reacted to some of this too. more on that in a moment but here's what's making headlines this morning elon musk has been in the headlines as he says that tesla has been the target of an employee sabotage experiment he told employees in an e-mail that an unnamed worker had
engaged in sabotage and given sensitive data to unknown third parties. tesla is lower in premarket trading putting its winning streak in jeopardy right now down by 1.4% apple iphones assembled in china would not be subject to tariffs. that commitment was made to tim cook although it wasn't specific when that promise was made cook did meet with the president at the white house last month to talk about the potentially adverse effects of trade policy on apple in china. and two notable earnings reports on the calendar this afternoon oracle and fedex will be reporting after the closing bell both are expected to show improved results from a year ago. right now you are looking at a live shot of the white house this morning that's where a trade war is front and center for the markets. president trump is looking to impose fresh tariffs on products from china at the rate of 10%. kayla tausche joins us now from
washington with more on that kayla? >> good morning, becky the president has asked the trade representative to study up to $400 billion in new tariffs a two-part plan that would hit back against china if it chose to continue retaliating as china said it would when they unveiled a tariff list worth about $50 billion in chinese imports on friday the white house statement says of china's retaliation, quote, china clearly indicates its determination to keep the u.s. at a permanent and unfair disadvantage further action must be taken to encourage china to change its unfair practices now, policy slapping tariffs on $250 billion or $450 billion in chinese exports would touch a large portion of all goods coming to the u.s. from china and would go outside the mandate of the u.s. trade representative which has sought to limit the impact on consumers of these tariffs if the number got that big. now, were china to retaliate in kind as it has so far, some
would encapsulate all u.s. exports to china which is why investors fear that china may do something more drastic like devalue its currency or sell treasuries and to be sure, china overnight said its response would be qualitative and quantitative but even as president trump ratchets up the tension with china, he's still showing some signs of wanting to make a deal. a group of republican senators will meet with zte as the white house works to soften or remove an amendment that hinders a potential reprieve that the white house wants to offer zte that amendment is part of the defense funding package that passed the senate 85-10 last night. the white house believes that it can remove that provision at some point throughout this process when that package gets reconciled with the house. and certainly that would be key, becky, to making a deal with china. >> kayla, thank you very much. we'll continue to watch this of course, all of this is hitting the markets globally the futures here as we showed
you are under pressure with the dow futures down by about 323 points that's a decline of about 1.4% s&p futures down by 28 the nasdaq off by 77 right now by the way, if the dow were to open here, we'd be looking at erasing all of the gains it has made for the year to this point. if you take a look at what's happening in europe right now, you'll see that at least at this hour, there are red arrows across the board germany the biggest decliner with the dax down. their own personal issues wreaking havoc there right now if you look overnight at what happened in asia, some of the asia markets getting hit particularly hard especially if you look at china with the hang seng down by 2.78% the shanghai composite down 3.8% and the shenzhen was down closer to 5.7%. joining us now to talk about this impact on the markets is
andreas amaya, darryl kronk, and our guest host for the next hour gabriela santos. g gabriela, let me start twith you at some point the calculus could change for investors >> i think it makes sense to be under pressure this morning. the figures we had been talking about before had been much lower than this. we expected after the 50 billion from friday to be talking about perhaps another 100 billion. today we're talking about $200 billion with the potential for $200 billion more. it's a lot more than what the market was working with when it closed yesterday so that makes sense. but one thing i think we'll end up focusing on later in the day is we have few details here. one of the points that kayla was making that makes this calculus difficult is the fact going forward $200 billion or $400 billion extra would involve a
lot of products that have a direct impact on the consumer. and that's very, very difficult politicly. >> meaning consumers would be paying more and more >> correct for now the $50 billion were inputs to other products there wasn't a direct impact on the consumer if we start talking about television sets and phone equipment, then you get direct impact on the consumer which makes it much more difficult politicly to go through with this >> makes it difficult politicly. but if there's one thing that the president has strong convictions on bb always has for decades, it's probably this issue. this idea that america's not being treated fairly >> very much so. if you go back in his 40 years of public life, he's waged war against any types of trade deficits and actually if you pay attention to what the administration has been saying for 6, 9, 12 months, they've been very direct on steel, aluminum, autos, airlines,
semis, and shipbuilders. those six things they've highlighted many times before. so i think they're running that play book right now. and we're having a conversation about what auto tariffs would mean as it relates to europe in that regard too. we actually think if you look at every hundred billion dollars worth of tariffs just as a rule of thumb, reduces global trade by about half of 1%. and probably dense global gdp by 0.1 of 1% so if you were to have $400 billion of tariffs executed not just discussed but actually executed, you're probably talking about 0.4% off of global gdp which today is about 3.9% to 4% >> when would that show up >> most of the latest round, the second 200, not the first 200 would be probably q4 of this year the first 200 is actually the hundred of 301 tariffs that just got raised to 200.
the thought was the 50 last week was the 25%. the next hundred would be at 25%. now you're talking 200 at 10%. the calculus isn't that much different there. if there were an additional 200, it's probably q4 of this year. >> andres, you're more laid back about this >> there's no way to know exactly how this is going to play out but i would say that based on the play book they've done -- i mean, you don't want to compare it, but look at north korea where everyone said this is insanity and the negotiation started. i think it's too early to call it anything more than that but going back to this to put context around this trade deficit for the u.s. is around 3.5%, the size of our economy. consumption is 69% i think it could affect the consumer to a certain extent but china's not the only country we trade with. so not everything that is affected by this trade
negotiation cannot be replaced by other sources it clearly would effect us on a quarterly basis. but i think we could buy tvs from somewhere else. that's the way i would look at it having said that, earnings might be affected. one of the biggest we look at economic data points that's correlated to exports globally right? if exports globally are effected negatively over the next couple quarters, that would effect equity markets >> it's effects them in a much bigger -- to a much larger extent >> yes i was talking about global earnings, but yes. absolutely you can see it by the chinese equity markets right? they're clearly more effected than we are. >> darryl, you point out this could have some impact on the short-term what i've been thinking about is much longer term if china gets to the point they no longer have to rely on u.s. components makers for some of these things, if they can beef
up their own industries -- we're talking years down the road. i guess this could play out as a o negotiating tactic but the longer you push it out, the more likely to push them in other directions >> that's a great point. if you look at the china 2025 plan, that's what they'retryin to do. expand the reach economically. a lot of that and the second round of proposed tariffs here are going to hit more of the industrial-type sectors. oil and gas, chemicals, some of the medical technologies have been what have been initially in the line so i think it's a little bit of a push/pull on the global expansion in regard to what industries could potentially hurt the u.s >> well, what you just said, if this is their plan to do this by 2025 anyway, maybe we don't have as much to lose. if their plan is to no longer be as reliant on us, maybe we're not risking as much. >> i guess that to me would
indicate it's a zero sum game. i don't think it's necessarily a zero sum game. that it decreases global trade, decreases global gdp so you have to think about this in terms of how do we expand the pie. >> on the bottom of the screen, wells fargo revamping wealth position look at this little thing here that's nice. you're proud like you report to john weiss? >> i do. >> so you've taken all the brokerage guys and combining them with the brokers in the wells fargo branches is that basically what's happening? you're going to be in charge of all of them now in terms of chief investment >> no. >> why not >> joe, i'm just trying to help out with the trade and tariff issues right? this is actually -- >> you're wearing a wells fargo button you don't expect to be asked when it's the biggest story on -- aren't you cio of the wealth management business of wells fargo? >> i am. >> are you instructed to not say anything >> we're still working on --
>> you didn't open an account for me that i didn't know about sitting here right now, did you? >> he's just a cog like us >> just a cog. i would say i'm more than that don't down play yourself >> wells is a great business i've been there 25 years >> i really thought you'd want to weigh in. >> thank you we appreciate it coming up -- give me a chance there say it loud, say it proud. senator mike rounds joins us to talk tariffs and the president's agenda and more. and later we head out to the french riviera that's where andrew is we'll talk to the endeavor cmo. stay tuned
trade tensions weighing on wall street rattling capitol hill joining us now south dakota senator mike rounds. i hate to keep hitting on the same thing, senator. might be new to you though and that is the idea that we're hearing more and more economists say we need to tap the brakes on the economy at 3.8% unemployment
and i'm making the case or at least the case is being made that what better time to address some of these long-standing trade problems than when you've got a little wiggle room with a strong economy is that your contention? or is this one big screwup to try and enter a trade war? >> i'm not going to call it a screwup. i think it has to be addressed and i think most of the country would agree that there's a better way to do trade than the way we've got it completed so far. nonetheless, i think there's a lot of us that would like to have a goal of hitting 4% gdp growth you can't do that unless you've got, number one, a good tax policy you need the regulatory relief i think the president's almost eliminated 1900 separations. we've done 16 grgs gnat resolutions of disapproval, but there are pieces missing yet you've got to have a good trade policy in place. we can produce more than we are today if we have a place to move it in terms of food, 95% of the
world's population in the market is outside of the united states today. and along with that, you've got to have a qualified labor force. that's one of the reasons why we really need to improve and to upgrade our immigration policies in the united states to start talking about a merit base system so combination of all of it together can really push our gdp. and that's what it's going to take, i think, long-term is shoot for 4%. make this thing happen >> senator, do you expect china to target trump's base with the retaliation in states like yours and in agriculture states to try to put pressure on him to back down >> just the talk of tariffs impacts our market and south dakota is an example we've got 840,000 people in our state. there's about 32,000 different farms within south dakota. let me give you an example of what the impact has been since march 1st. we do a lot of corn.
tha that's our largest commodity crop corn is down 11 cents since march 1st. but soybeans which was subject to the tariff discussion, that's down a buck 45 the impact in our state and cash just in terms of balance sheets for producers, that's about right now somewhere -- and this is about -- this is what's scary about it it's about $430 million in impact in our state right now on balance sheets >> senator rounds, to this point, donald trump's base of support has been strongly behind him. in fact, his approval ratings right now are at the highest level they've been since he took office is that the case in your state still? are they still standing behind him? >> it is in fact, i was just home this weekend and visited with a lot of folks grocery stores and so forth. the message is, number one, may not like the fact that we've got commodities that could be under pressure by other countries. you know, it's about time we
address some of this stuff they like the fact the president's standing up for the united states. they do worry sometimes that maybe the strategy behind it is not totally laid out as we talk about it with them, we'd say, look what we're concerned about is as we get closer to crop production time period, as we look at what the harvests are going to be looking like and so forth, it would be good to have some trade policies established so we don't have a real impact on the commodity prices so they're sticking with him right now, but they want to know what the end game is they want to know and fairly quickly what are you going to do we lost tpp. you haven't got any of those other countries in an individual deal with us yet we're fighting with mexico who is our number one recipient of corn from the united states. we're fighting with canada and we're fighting right now with china and they buy about 25% of the entire soybean market coming out of the united states so there's patience there.
there's an understanding that it's not going to be easier or it would have been done a long time ago but there's also a level of concern saying i hope there's a game plan. let's find out what this is about. >> we understand politics are local. we understand your concerns. but certainly, there's a lot of other things that got to have you just nodding gdp, whatever. things that are headed the right way. how'd you vote on the zte deal yesterday? you vote to not let that go? >> i'm supportive of the additional sanctions and the additional restrictions on zte my concern is a little bit different than some folks. i think the president absolutely has the ability to negotiate a fine the billion-dollar fine, i had no objection to that my concern is on national security grounds with whether or not the product that is being delivered and installed could create a national security issue later on so i think the cotton amendment did a lot of good things for us in terms of sending a message. i think the house does a pretty good job
somewhere in between what the house has in their bill and we have in the senate bill will be where we end up talking about the administration i'm going in on wednesday to visit with them as well. >> you think cruz on the southern border has a chance of going anywhere how's that going to work itself out? not helping anything at this point. >> i agree with you. nobody likes to see what's happening down there right now i think senator cruz has actually proposed something a lot of us have talked about. number one, expediting the process so these individuals that are coming there few they're illegally entering the united states and not going through a point for asylum, they are charged with the crime that's the zero tolerance policy what senator cruz is saying let's get these individuals and their kids let's set up facilities to hold them then get them back out within 72 hours. that would take care of a lot of the problem. >> thank you we appreciate it all the things you're ready to
talk about today appreciate it, thanks. >> thank you coming up, she has worked at apple, uber, and now endeavor helping build brands and celebrities for collaboration. we will hear from boz saint john who is live with andrew in cannes this morning. plus we have a selloff among trade fears. the futures right now for the dow down 360 pntois. the nasdaq off by 88 "squawk box" will be right back. . your joints... or your digestion... so why wouldn't you take something for the most important part of you... your brain. with an ingredient originally found in jellyfish, prevagen is now the number one selling brain-health supplement in drug stores nationwide. prevagen. the name to remember.
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when we return, andrew joins us again live from cannes with a special guest. andrew, what's coming up >> we have a marketing all star, joe, live here in cannes boz saint john is going to join us she just joined endeavor after being at uber. before that worked at apple, pepsi. we're going to talk to boz when ce ckivfr cneweomba le omans. let's begin. yes or no? do you want the same tools and seamless experience across web and tablet? do you want $4.95 commissions for stocks, $0.50 options contracts? $1.50 futures contracts? what about a dedicated service team of trading specialists?
among the stories front and center as you probably saw, wells fargo is considering a combination of its private, client, and wealth brokerage units. both have many overlapping functions. however, the bank says no final decision has been made really just talking about there are brokerages in offices acquired over the years. then there are brokers that are in banks and they'd be putting the two together >> i guess that makes sense. >> you know, save some money >> cuts down bureaucracy >> exactly but they are dealing -- still part of it is dealing with the leftover pr problems and everything else that the formerly cream of the crop -- >> in terms of reputation. it suffered and had been tarnished pretty well. at&t promising fewer commercials, smaller channel bundles, and personalized programming following its buyout of time warner
john stanke, ceo of the newly renamed warnermedia unit want to change how consumers see it. saying it's a positive on the strategy but adding it will take a few years to bring the significant financial benefits to the company the government's out with its latest reading on housing activity this morning. releases in about an hour. economists expecting a 1.8% increase following a 3.7% decline in april all right. let's get back to this morning's market move. we're watching dow futures down by about 370 points right now. mike santoli joins us with more to explain what he sees. >> well, what i see is a market that was a little bit primed to look for an excuse to back off, right? yes, obviously this was an incrementally negative news about the additional products, chinese imports.
also the context matters which is we're a little bit worried about a global soft patch not really in the u.s. but elsewhere. so it feeds a little bit into those fears we already had moving out there the other part of it is, the rally had kind of stalled. even though you had good intra-day rallies the past two days and also this trade measure is not discernibly part of an explicit negotiation that's what we've heard all along. this is actually atactic we went from one set of products without an negotiating to let's look at more so if it looks like kind of raw, kind of aggressive moves, i think the market doesn't like it a lu little bit more. >> i look at the situation where it's harder and harder for both sides to emerge saving face. when you ratchet things up like this, someone is going to be perceived as a winner and someone perceived as a loser while that might be a great thing as the president to say
i'm going to win on this one, what does that mean down the road >> and how do you define winning? if you're a net importer, if you have a slowdown in trade flows, maybe winning means closing off some economic activity i think that's what people are concerned about. i've not really thought the this was going to be the issue that was going to be a swing factor for the market up or down. it seems like this nagging thing that when the context is right, the investors take hold of it. and you've had diminishing impact if you look back to early february when you started to have these fears, used to have big one-day selloffs you've gained resistance to it >> that's been gabriela's point to this too. >> and i like something sad mike said about the global soft patch piece. we think the most important situation is the pmis coming out for june we'll be looking at europe and japan to really see whether that
soft patch in the first quarter was temporary, whether we're having a little bit of an improvement. i think that will be good for everyone in terms of sentiment. >> joe, to your point earlier this morning, this is all happening at a time when the u.s. economy is going strong and global economy is not. that article earlier was it last week or this week the lead story about how the rest of the globe is slowing down. probably not the time you want to be cutting off your relations with the u.s. market >> you wouldn't think there's time to cut off relations. i did see a stat yesterday that 11% of global trade flows total cross the u.s. border. >> really? >> and so what are we 25% of the world economy? obviously we're a much self-contained economy than others are >> right that's why a lot of the small caps are doing so well they don't care what happens you hear trump he says trade wars are easy to win. he thinks that people need us a lot more than we need them
i don't know how you -- if you told him that's not true and give him all these facts, i think he'd still say -- >> that's the way it seems there's not a lot of persuasion there. i think the question is if you say, what's winning. >> i know. >> and i think really that clashes with just the general ceo, professional investor world view which is that this is a war of choice. that these are not -- this is not the top problem in our country. >> think of all the inequities try to add them up, some of them pe perceived, some of them real and you got them to settle if you got -- is it worth a couple of months i don't know. >> where does it get you >> some of the stuff is bad. some of it's bad, but some of it we shouldn't just sit there and say thank you, may i have another. >> i think if you look at corporate america, they felt like the tax law did what they
thought needed to be done to level the playing field. >> yes >> and this is a war of choice >> all thoseceos have -- you know, they got little bonuses when the stock gets to a certain level. they don't want the stock to back off >> it's not just that. it's what they're trying to sell each and every one of them just like with senator rounds, we don't want to be the ones bearing the brunt of it. >> 12 and 15 years ago every single ceo, every meeting was what's your china trstrategy they spent forever trying to make their accommodations to this >> thanks, mike. >> cue the zztop let's get to cannes, france. what this is "sharp dressed man." i think we've got a few zztop songs for you today, andrew. andrew is in cannes, france. we're going to do the cheap
sunglasses a little later. there it is. on the french riviera and he has -- you know what if you're on the french riviera, you've got to expect grief that's unbelievable you finagle this into a business dealing take it away >> we have a marketing all star with us. boz saint john is here she just joined endeavor after a year app uber. before that apple music, before that pepsi worked with beyonce as we talked about. great to have you here this is your first time in cannes >> it is my first time in cannes. >> can we just show? check out these shoes, guys. just because you've been talking about how fabulous it is to be here in cannes check out the shoes. because the shoes unto themselves are fabulous. it's also istracting we were talking about just all the fabulousness behind us we can't even show you because if you could see some of the stuff
that's going on on the beach even right behind us -- >> oh, man >> right >> i'm not going to look >> but let's be serious. >> yes. >> so you just joined endeavor literally last week after a year app uber >> yes. >> you started uber to run the brand there. you came in under huffington tell us about the experience of being there and why you decided to leave the company >> well, i came in right in the moment of turbulence you know travis kalanick was ousted about a week after i started and so with that came a whole set of other issues. maintaining what was a very troubling time both internally and externally while a new ceo was brought on and there were issues with the board and all kinds of challenges so i went full force in trying to re-establish what i thought was going to be an important narrative for uber which was, of course, fixing the external
cultural issues. >> and a year later, how do you feel about the culture inside uber >> i think tit's not there yet, but i do believe in the rest of the leadership team who are working really hard to fix everything >> are you behind or what did you think of the ads with dara we've now seen on television >> i wasn't behind them. can't take credit there. but i think they're truthful you know he is sincere in what he wants to do. along with the leadership team and so he's trying to communicate that to the rest of the world >> do you see a bigger problem in silicon valley when it comes to culture and sexual harassment and diversity? >> of course. >> and do you see -- given all the conversation we've had about that topic, do you see meaningful change? incremental change >> yeah. that's a tough question. i mean, there is a problem, by
the way, everywhere. everywhere it's not even just silicon valley by the way, i was okay with being at a company in which it was now sort of the poster child for everything gone wrong. you know but the secret is that everything is wrong everywhere you know we've got to move the agenda forward in all of the companies. not just at uber and so for me, it's -- progress isn't happening fast enough. >> hard to leave uber knowing there's an ipo coming? >> no. >> no? >> no. >> is one of the reasons you're interested in going to endeavor because there's an ipo coming? >> wow you make it sound so strategic that way no, i follow my heart, man i do i follow my gut. >> tell us what you're going to do with ari. joe and a couple other people were all clients effectively, full disclosure. >> so this is great. i'll be utilizing your help, too, then. >> tell us what the plan is at endeavor are you doing? >> i'm the chief marketing officer.
endeavor has been established as the parent company, right? for wme, img, miss universe, the professional bull riders association, endeavor global marketing. sop many companies underneath that parent. and so i want to establish what endeavor means you know, what does it mean as a brand, as a company. >> so what does it mean to you >> well, it's the largest entertainment media company there is and it can be really full service in being able to take all of these different types of people and talent and organizations into one continuous idea. >> how much of your role is going to be in working with some of the digital players that you used to work with? i'm thinking about apple which is now jumping to the content in a big way. >> a huge part this is why i feel i've been working my entire career to get here i couldn't be more perfectly positioned to understand what happens from a brand standpoint and developing a stand as well as working with talent and then working with content creators and distributors like apple. >> as a former appleonian, what
do you think of their content trat j strategy >> i helped develop it so that's a bias question. >> relative to where netflix is now and hulu and amazon, where's apple? and where will they be >> behind. but i think it requires great story telling. as anything. all of those brands you just mentioned needed to have a h, you know, in order to establish them that's what apple needs. >> boz saint john, great to see you. >> thank you >> please sit up straight. don't lean forward like you've been doing it's a family show >> what's happening? oh because -- oh, yes the gentleman behind us, he was in the shot, is that what you're saying >> yeah. stay like that stay like that no yeah there's a lot going on >> okay. i see.
apparently what was going on behind us was more interesting than the interview >> every time we go to break, we can't understand why you keep turning your back to us the entire time. >> yeah, well, it's fascinating back there, i must tell you. yeah >> you know what europe has a much better, more open sort -- i mean, what's the big deal, right? >> yeah. you loved it when you were in germany. >> we're looking at the stuff going on behind you. >> thanks. that was good. and yeah, ari. god almighty what about our fees? aren't our fees coming down? >> we're working on the fees right now. we're negotiating the fees she's on the case. >> okay. coming up, the author of "the perfect weapon" book david sanger will join us to talk about cyber weapons and new threats to our national security at the top of the hour, oil tycoon harold hamm is our guest. we'll talk oil prices, opec,nd a
the president's energy policy. "squawk box" will be right back. help me meet a client's need. is the fund built to sell or built to last? etfs are only part of a portfolio. so make it easy to explain. give me a quality fund that helps me get clients closer to their goals. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence. before investing, consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully.
holiday inn express, becareally want to be there, but you can't. at cognizant, we're helping today's leading media companies create more immersive ways to experience entertainment with new digital systems and technologies. get ready, because we're helping leading companies see it- and see it through-with digital. all right. welcome back, everybody. let's look at the futures. big market day this morning. dow futures indicated down by
about 352 points the s&p down by 31, the nasdaq down by 99 all of these with concerns of the additional tariffs from the trump administration has become clear. this is a decline of maybe 1.4% for the dow right now. the hacking of sony pictures several years ago revealed what can happen to a company that's targeted by cyber intruders. and on a national scale, countries may worry about an attack on the energy grid or weapons. joining us right now is "new york times" national security correspondent david sanger his new book is called "the perfect weapon: war, sabotage, and fear in the cyber age. thanks for being here today. >> great to be here. sorry i'm missing andrew but it doesn't look like he's suffering much. >> no, it doesn't. he is enjoying the scenery, shall we say david, let's talk about what's been happening on this front you've been covering this for
over a decade. cyber warfare. and you say it's not the big pearl harbor attack we need to worry about but other issues more insidious along the way why don't you describe that. >> well, becky, we started off with people always worried about sort of the lights out scenario, the moment where somebody hits the power grid and you lose all the electricity from boston to washington and chaos ensues. that can still happen at the beginning of a major conflict. and certainly the united states builds into its war plans now doing that to other countries. you'll read about a plan to basically blackout iran if we got into a conflict with them. but i think if we learned anything from the russia hack, from the attack on sony you mentioned. from the hundreds of other state sponsored attacks, cyber is different. it's much more targeted.
it's much more subtle. what we learned in the russia hack is you can do i think thes people don't even notice is happening at the time. what americans are trying to get their heads around is we're just the collateral damage in this battle among states that's taking place way above our heads. and in fact, cyber has become the preferred weapon of most states. >> is there retaliation? we hear all the time about the russians doing this, the chinese doing this are we retailuating for the acts we've seen >> we are not as much. we've done cyber offensive things obviously to iran during olympic games. that was the stuxnet virus no north korea against their missile program. president obama authorized a few years ago. but when it comes to attacking back for attacks on the united states, we find ourselves constrained. all presidents, democrats, republicans. why is that? because we are so vulnerable to escalation
so during the russia hack, people came to president obama with some interesting proposals. let's unplug russia from the world financial system, through the swiss system let's go after the oligarchs let's make putin's money disappear. let's reveal his own communications with the oligarchs and reveal how much he's been funded by them for each one of them, there was a problem. disconnect them from the world financial system how are the europeans going to pay for their gas over the winter right? but there was another problem which was the russians had so many ways to escalate against us including into the election system on election day and president obama hesitated to do it figuring we'll clean this up after hillary clinton's elected. well, that didn't quite work out that way >> we can't exactly say we're going to hack their election systems. >> and that raises an interesting question which is do we need a sort of geneva conventions of the cyber
world? because companies are never going to be able to protect themselves against everything. they've invested heavily, the financial industry and utilities have invested heavily. that'll take care of about 85% of it. if the state is coming after you, you can't build big enough walls, right so -- >> as a private corporation. >> as a private corporation. even the biggest private corporations so we need to begin to have some rules of the road. and those rules of the road might include things that are off limits you know, we don't go after election systems we don't go after hospitals or communication systems and so forth. what's interesting is i'm not sure the u.s. intelligence community is willing to sign up for that >> david, i wish we had more time, but please come back soon. >> thank you be glad to do it. >> the new book, by the way, david sanger "the perfect weapon." come up gabriela santos on this global market selloff on what you should be doing buy, sell, stay where you are? then at the top of the hour,
harold hamm joins us to discuss the president's agenda his company's been one of the biggest oil suppliers to china plus b. riley global strategist mark grant on the market's latest move both equity and fixed in k he's always got some compelling stuff to say the futures at this hour, about where they were. they got a little biwoe.t rs almost hit 400 down on the dow now back down to 333 we'll be right back. it was worse. a sinkhole opened up under our museum. eight priceless corvettes had plunged into it. chubb was there within hours. they helped make sure it was safe. we had everyone we needed to get our museum back up and running, and we opened the next day.
let's turn to our guest host gabriela santos. global market strategist at jpmorgan funds you can help us globally would that be your recommendation right now to be global or -- i don't know domestics looking better and better, isn't it >> i think we've gotten really good at going back to that play book of where we say the u.s. is the only place to be the world is falling apart that was not the case last year. but we see investors really quick to go back to that moment where it truly was the u.s. in crisis after crisis elsewhere. we have talked about a soft patch outside of the u.s. this year but it's a soft patch. while the u.s. is looking good right now, the world should be catching up as the year progresses, right? so we do still think u.s. is a key component of a portfolio on the equity side. >> small caps many for >> small and large, right?
because you've got things going for small caps in the sense of they're less vulnerable to things like trade tensions, for example. >> right >> but for the large caps if you think about margin pressures, they're better able to handle higher rates, higher wages not a higher dollar though then we come back to this idea that the soft patch in the global economy is temporary and we should resume an improvement in emerging markets and in our view that should mean a weaker dollar going forward for us the u.s. is a good component, but let's not throw out the rest of the world quite yet. emerging markets especially is one we like quite a lot. >> gabriela, thank you >> thank you. >> thanks for joining us the past hour. when we come back, harold hamm on the looming trade war. plus global market selloff we will talk trade jitters and the market reaction. much more also coming from cannes andrew is there and talking to some of the biggest names in
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stocks on edge global stox in the red as the u.s. issues a new trade threat to china iphone spared. the deal trump offered to tim cook straight ahead. we're going to talk to joanna coles coming up as the final hour of "squawk box" begins right now ♪ live from the most powerful city in the world, new york, this is "squawk box. >> good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square. i'm joe kernen along with becky quick. andrew ross sorkin is live in the french riviera in cannes as you can see right there and that's not a green screen. i can tell you that. that's real.
see? that's absolutely real and andrew's happy and the euro is like $1.15. he's throwing money around there. buying drinks for everybody. first up, our top story. the markets right now are indicated sharply lower on the increasing trade tensions. down 325 on the dow jones. the s&p down 28 or so. and the nasdaq down 95 similar losses in europe nothing too significant. 323 sounds big on the dow. it's about 1.4%. germany which has, you know, some problems unto itself, down 1.4, france 1.3% and lesser losses in the others treasury yields, having one effect and that sort of moderating some of the increases we've seen. now 2.884. >> nowhere near 3% now we have complete team coverage from around the world
nancy is in singapore. jackie deangelis is here in new york and kayla tausche is in washington kayla, let's start with you. >> president trump late yesterday directed to find $200 billion followed by another $200 billion in chinese imports to hit with a 10% tariff if china keeps threatening to retaliate in response to u.s. tariffs as china did friday the white house statement says china clearly indicates its determination to keep the u.s. at a permanent and unfair disadvantage further action must be taken to encourage china to change its unfair practices a policy slapping tariffs on $250 billion or more would engulf a large portion of chinese goods coming into the u.s. and u.s. trade representative would be hard pressed to limit the impact on consumers and prices china only imports $130 billion in u.s. goods, so it couldn't retaliate dollar for dollar, but it says its response would be qualitative and quantitative
some investors fear china could sell treasuries or devalue its currency president trump still appears interested in making a deal. the white house will appeal to gop senators on wednesday trying to tie the white house's hands in granting a reprieve to zte. senate passed a measure last night to do just that and is looking for a veto-proof majority in the house. but the white house wants to soften the language or remove it entirely so it can keep one of the key bargaining chips >> thank you very much let's get to nancy with more on the selloff on asian equities we saw overnight. >> well, it wasn't pretty. we did see selling across the region in asia red arrows for all of these major markets, in fact let's give you a look at the breakdown. if you're looking at the nikkei 225, off 1.8%. but let's hone in on the greater china markets. not only are they really caught in the cross hairs, but the
markets here were on holiday on monday so this is the first day of trading since we got the initial $50 billion tariff announcement coming from president trump. and now the threat of additional tariffs that kayla was just talking about certainly not helping sentiment. you can see the losses here. the shanghai composite off 3.8% barically escaping the bigger loss around 4% we saw back in february the shenzhen off almost 6% now, this tech heavy index, it may not surprise you it bore the brunt. tech is at the heart of the u.s. trade concerns with china and it is expected to be extremely vulnerable when it comes to these terror threats in focus. we also saw tech weakness in taiwan amongst some of the semiconductor names swem you're looking at the hang seng off as well. a lot of that selling has to do with the safety flows into the japanese yen back to you. >> thank you very much crude prices in the
meantime, dropping as we count down to the opec meeting jackie deangelis joins us with more on that front >> good morning. as the countdown is on, the oil market is a little tentative wti gravitating to around $65. brent around $75 a few things to think about here when it comes to crude oil prices some is coming from speculation that opec will increase its output on friday that's after holding to its almost 2 million barrel a day cut for about a year and a half. what could that increase look like well, some say as small as a quarter of a million barrels a day. that's a pretty wide range now, the increase tensions with china is also having an impact on currency prices energy products could be included so a stronger dollar, perceived drop in demand, those factors could pressure prices too. finally, u.s. production hasn't quit but the u.s. inventory,they ar drawing down that's a seasonal issue. that's offering a little support
for prices another supportive factor and the reason that opec might up its numbers is the fact that iran and venezuela, they could see large dropoffs in production as well. there's a push and pull in the market right now you can see that reflected in pricing, guys. >> thank you very much joining us right now to talk about this is harold hamm. he's the chairman and ceo of continental resources. thank you for being with us today. >> you bet good to be with you, becky >> let's talk trade, first up. continental resources is right in the middle of all of this it's the largest producer of shale, of oil from the bakken shale deposit. you've shipped more than a million barrels of crude oil to china since that export ban was lifted a few years ago what does this mean for you when you start hearing trade talk kind of ratcheting up and trade concerns ratcheting up like this >> well, you know, first of all, let's talk about where america is set, you know, with trade
you know, as far as crude oil goes first after all, there's $10 differential right now between brent and wti that certainly puts u.s. oil in the market today. >> okay. meaning what that there's more demand for wti because it's a cheaper price than for brent but what happens when you start having these concerns about tariffs coming up? do you worry it'll mean you export less? >> no, i haven't worried about, you know, the tariffs on oil it's a commodity that can go anywhere in the world. certainly if that comes up with china, you go somewhere else in asia with your oil so i haven't personally been concerned with it. >> and it hasn't changed anything continental is doing? it's a fluid market? >> excuse me i didn't hear that >> i'm just saying it hasn't
changed anything continental is doing because you say it's a fluid market it'll get soaked up somewhere else >> it's a fluid market most of our sales domesticicly and certainly we're looking around the world asian market has been good for oil. so, you know, that's primary market a lot of oil coming out of here. when you look at all the exports today, little over 2 million barrels coming out of the u.s. which is a big leg up from where it was, zero back in 2015. so we're doing well with exports. we expect that to increase, you know, as we get more pipelines, capacity here in the u.s >> harold, let's talk about this opec meeting coming. you've been critical of opec in the past calling them a toothless tiger at times heading into this opec, you said they are largely responsible for
the run in oil prices. how would you think about the cartel at this point how powerful are they and how much power do they have over the oil prices >> let's back up to where all this began you know, if you go back to 2014, you know, they use the same tactics they've used on u.s. producers in the past that was increased production drives price down, put us out of business and just didn't work you know, with horizontal drilling it just didn't work this time. so i was real critical of them when they attempted to do that huge mistake for them. since then they got their act together they cut production and started balancing, you know, the supply and demand in the world. and that's worked very well. we've seen prices respond and they've done, you know, acted very responsibly now for the past 18 months so they've done the right thing. you know, i think, you know,
we're not a cartel over here you know, we're all independents and produce into that market but same market they do. i've been impressed with them the last 18 months >> with oil prices at $65, as you mentioned, everybody here is independent, can do what they want does it make sense to drill as much as possible at $65 and is that what's happening? >> you know, we have to watch the market as well, you know over-production here will drive the price into the ground again. you know, we certainly can't work very well at $35. we've all learned that lesson. so, you know, it's -- i think it's incumbent upon us as producers here in the u.s. to be responsible as well. so we can't just depend on opec and shouldn't. so we've tried to do our part and not get too far over it.
pay our debt down and do the responsible thing. >> harold, you're involved in electing a president, obviously, a big supporter. and you are part of a new, i guess, a pact that's going to try to help raise some money for the midterms or for the re-election of the president america first action, the fund raiser >> i serve on the board of america first. it's a premier superpac backing up the policies and the president and vice president pence agenda certainly these midterm elections mean a great deal to his agenda and being able to carry it out you know, very glad the president has done such a wonderful job. you know, we see unemployment down to 3.8% and i know from experience that a lot of times that last 3% is very hard to find. we found that out in north
dakota when unemployment, of course got to 3% before and you couldn't get enough help out there. >> what will you earmark for the priorities will you be involved with that you try to defend the house. you try the senate that might be even possible, some republicans think that to maybe increase the gop majority in the senate. but how do you view it you think the house is at risk at this point, harold? >> i think we're in good shape on both of them. i think at this point, it looks -- both houses look good both the house and the senate. we think we might even be able to pick up a couple spots in the senate and certainly that would be great and i believe we'll keep the house as well. >> okay. harold hamm, thanks. we appreciate it the president's actually going to speak there, right? tuesday night? >> yes, he is. >> okay. all right.
i think you can probably watch that on fox. that's about it though appreciate it. thanks, harold hamm. for appearing today. before we head to break, let's get a check on the futures. continuing to trade low for. down about 292 coming up next, we're going to take you live to cannes where some of the biggest names in the advertising world are gathered okay that's a safe shot i want to check that out before i came to you, andrew. what's up? >> it's safe it's safe. i'm going to keep my arms where they are, though, because what's behind me might not be safe or at least not work safe when we come back, joanna coles is going to join us from herselherselarst also part of snap. so much to talk to her abouthe t future of media. we'll talk to joanna coles when we return live from cannes
s&p futures off by 25. nasdaq by 95 reportedly telling tim cook that iphones assembled in china will be spared from the tariffs. trump made that commitment to cook even though it was not specific about when that promise was made more will come out about this i'm sure but the stock down -- >> you know, trump can say that they're not going to impose u.s. tariffs on these goods, but the question is what does china do in response? >> it happened to -- what happened to -- the trade wars are all good >> maybe three, four weeks ago >> verizon was upgraded to buy from hold at deutsche bank the price has not yet caught up. they also pointed to the
potential from sg -- or 5g >> your eyes and mine. >> 5g technology and improving wireless business. you know what? >> it's not just my eyes >> i'm not complaining about my eyes though. i need no reading glasses. and i can see really well far away so i got the right mix of contacts and stuff at&t downgraded to neutral at jpmorgan making comments about the time warner purchase. but noted it will take several times for that strategy to see significant results. all right. still to come this morning, a live report from cannes. andrew's going to be speaking to hearst magazine's chief content officer joanna coles that interview is next and later, s.e.c. commissioner robert jackson will join us. that's coming up at 8:40 eastern time "squawk box" will be right back.
relative basis down 100 points right now. and the s&p indicated down about 26 or so europe is red across the board with similar losses to what we're experiencing here. down 1.3% in germany 1.25% in france. then overnight in asia, some even greater losses were manifest you can see. down about 3% or so. japan, the nikkei down 1.75% and shanghai down about 1.15%. joining us now is mark grant at b. riley so much to talk about since the last time we saw you, mark i guess let's just start with these trade tensions with china. what's it mean for equities? what's it mean for the bond market >> yeah. we're in choppy seas, joe.
no doubt about it right now with these trade tensions one, you know, it used to be we're going back and forth about something happening. now president trump put in $50 billion and another $200 billion. then he said if china's going to retaliate, he's going to put another $200 billion in tariffs. that totals $450 billion and you're talking about a significant problem right now. >> although, we keep doing it on percentage basis what that translates to. not the end of the world it depends how long it is, too, i guess. nobody knows when a skirmish -- i'd still say it's a skirmish. you say it's a war yet >> i said i thought we'd move from the skirmish stage to the battlefield stage. and then also, you know, we're still waiting to hear from the european union how they're going to respond to the tariffs we put on aluminum and steel. they have a big meeting coming up on the 28th so we could literally get caught
in two battlefields at once. my point to the institutions i talk to frequently are there's a lot of risk on here. none of us know what's going to happen exactly, but there's no question there's a significant amount of risk on the table. >> we can pick our poison. rates have been more well behaved when we're now worried about this and i've made a point a couple times that some of our economics guests are saying we're running too hot. the economy is running too hot needs to be cooled off fed needs to go more quickly wouldn't that be the time to try to address some of these inequities in the global trade picture, mark? or is that just -- we should never try to do anything with how we're treated? >> let me address that a little broader, joe i've made a comment a couple times that the u.s. government is trying to get the economy up moving, growing.
have more jobs and the fed raises rates trying to slow the economy. i sometimes wonder who the fed is working for but in this particular case, joe, if these trade wars do heat up, you may literally see the fed stop in its tracks because of the problems that the trade issues could cause and we could see interest rates head back down i think all the fed would have to say is because of what's going on, all the issues with china and the european union potentially, we're going to stop raising rates. we're going to go on hold. i think we would see a rally in the bond markets also interestingly enough as you know on your own show, a lot of guys have come and said, you know, interest rates are going to 4%, 5%, 6%. and i think that they are using very poor thinking -- >> mark, you're not scaring me you haven't convinced me -- you haven't convinced me that maybe there's a method to this that there might be an outcome that's
either neutral or maybe slightly positive and not necessarily the end of the war because we, you know, we have violated the first rule of frequee markets. and that is trade tensions i know deficits -- you know, you just can't knee jerk them and say a trade deficit is always bad. because we are consumers and we do like to get things cheaply. but it would be nice to export more it would be nice if we weren't -- if the thing we were exporting wasn't our, you know, our currency and wasn't -- you know, they come back and buy our businesses and suddenly we don't own them there are some things, you know, i know it seems sort of -- maybe it's not sophisticated thinking, but, youm know, we want america to do well >> absolutely. i've been on "squawk box" with
you for 22 years not once including today did i ever want to or try to scare you. never. >> you scared me a lot many, many -- i've walked out of here, you know, with weak knees a lot. this is episodic with you. we'll have another episode next week or the week after we've got to go. appreciate it. >> good to see you when we come back, breaking economicew ns. a key read on housing. that is next ge of motion. i'm fine. okay, well let's see you get up from the couch. i'm sorry, what? grandpa come. at cognizant, we're uniting doctors, insurers and patients on a collaborative care platform, making it easier to do what's best for everyone's health, every step of the way. you may need more physical therapy. ugh... am i covered for that? yep. look. grandpa catch! grandpa duck! woah! ha! there you go grandpa. keep doing that. get ready, because we're helping leading companies see it- and see it through-with digital.
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with pg&e in the sierras.y, wand i'm an arboristg. since the onset of the drought, more than 129 million trees have died in california. pg&e prunes and removes over a million trees every year to ensure that hazardous trees can't impact power lines. and since the onset of the drought we've doubled our efforts. i grew up in the forests out in this area and honestly
it's heartbreaking to see all these trees dying. what guides me is ensuring that the public is going to be safer and that these forests can be sustained and enjoyed by the community in the future. welcome back to "squawk box. breaking news, our may read on housing starts expecting a number in the up 2% camp more than double we're up 5% at 1.35 million annualized units that follows a southerlily revised number we go from minus 3.5% to 1.35. really good number permits? exactly the opposite we're expecting down 1%. down minus 4.6%. last month, upwardly revised up
1.3 1.364. so what's ahead of us doesn't look as optimistic as what we're seeing on the start side but that isn't the big story of the day. the big story of the day is looks like we're breaking our streak although it's too early to tell. let's see where it stops but we're at 2.86% on the 10 it hasn't stopped the curve flat bing we're still about 36 basis points separating tens and twos. of course we're going to continue to monitor all that as trade. maybe when markets get involved, think t.a.r.p. you do get a little bit more activity by the players involved joe, what do you think >> i don't know. i'm dealing with what i really want i'm afraid to get what i really want, rick i'm not sure how's this going to play out all this trade stuff
if we could take care of some of these long running unfair practices when we're in a good position to weather the storm, i don't know if that's right but i could see how someone could make that argument. anyone that's read adam smith, it's you never do anything like this it's like a mortal sin >> you bring up one of my favorite points, joe just because something is a certain way and it's been that way a long time, doesn't mean that you just don't question we're not an ignorant species. stress test and kicking the tires is always a good practice no matter what anybody thinks. i think that we've used some blunt instruments.
but sometimes a little bit of chaos creates a better ending. we'll have to see. it could still go either way, joe. but i do think there really is a prize. i'm just not sure how you extract it in a global environment. and that brings me to what i like best about this it's messy maybe it won't turn out well i'm not a true globalist in the sense of it. i want people to be in control that are on a more local nature. i do think there's certain issues that transcend that but i think whether it's the -- what's going on with merkel versus the italians. what's going on with various populations across the world, obviously those that are being ruled and those that are the rulers, there's an issue there that is festering. and i think that is a dynamic that should be on the front pages a whole lot more >> you know, leisman's muttering. he's popping prilosec. i don't know why i -- i shouldn't do that, but steve leisman is here with more on president trump's new trade
threat to china. and the potential impact on the economy. i have a stone i have a stone that has a -- >> you're high no, no you have a stone >> i have a tranquility stone. it's not a ser renserenity now e but i'll bring it in for you >> what was the pole they danced around a festivus stone >> half of our audience don't know what we're talking about. >> "seinfeld"? >> yeah. talk to people under 35 or so, no idea what we're talking about. you're ruling out big chunks of the audience maybe that's why there's only three of them. maybe if we had emo music underneath this here. >> their parents are paying the cable bill >> they're not watching cable, joe. >> if they are, it's in the basement >> as the old saying goes, a few billion here, a few billion there. soon you're talking about real
money. we're now talking about the impact to u.s. growth and inflation. if such an escalation does materialize, it would have significant economic impact on china and the u.s. and the rest of the world at a sensitive time for the global economy the probability of a trade bar is rising. oxford says they can't rule out cooler heads prevailing will end this if they don't, the tariffs can shave 0.3% off the chinese growth and 0.2% off u.s. gdp peter boockvar saying this morning, the strategy now seems a trade war of attrition slower growth and higher inflation is the only result of the current path if strong growth continues, these will be not more than a nuisance but if the u.s. goes back to trend, say 2.5%, the negative trend could wipe out all of the extra growth up to this point, though, most had feared that it wasn't enough
to warrant on gdp or inflation the biggest concern was uncertainty. now it seems to be a subtraction from gdp if we get up to these levels of $450 billion and change of tariffs and retaliatory tariffs. >> unfortunately, the -- china, it's 50% more shaving off a 7% numb number >> at 6% growth. >> that's what i just said >> i'm sorry i thought you were talking about the stock market >> no. i'm saying if they lose more than we do, we're starting at 4% which kills you. >> right no not at all >> all right >> here's a question for you i like your idea this is a good time to do it. >> okay. >> do you really want to regulate the economy with tariffs? >> i don't want to regulate our economy with tariffs
>> are you wanting to -- >> no. i want to address some of the -- >> all economists agree with that all agree with that. >> they do and it's not just -- >> and they agree we have problems in the trade system nobody agrees this is the way to do it. >> we're not going to have a shooting war with china, but they can leave us in the dust. >> how can we take on china when we're pissing off europe the way to go after china is to go at them with europe and canada >> that's not the problem. but they do some stuff too you know, they've been doing pretty well by us as well. >> yeah, but world tariffs -- >> you know who's over there >> i know he's over there. >> andrew. he doesn't have a care in the world, either, about all this stuff. >> because he's in cannes. >> he just wants to make sure he situates himself properly so we don't see this nude beach where he is. had a special request to broadcast from is it -- it's directly behind you right now, andrew? is that where we are >> we are in front of the beach.
but not -- >> easy. don't move >> we're good. we're safe it's all work safe you don't need to worry. but more importantly, joanna coles is with us this morning. chief content officer at hearst. and of course a board member of snap and executive producer of television extraordinary >> i have to say i can't see as many naked people as you promised me. so whsomewhat disappointing but everyone's looking fabulous. >> help me with this when we were talking before we came on, there seems to be a little -- despite the weather, there seems to be a bit of anxiety here about the state of the media and the state of advertising right now. >> i think if you were to look for themes panic might be a theme. >> that's worse than anxiety that's panic >> i think there's an element of panic. and i think that i was just talking to the head of a media agency who's talking about the book that's caused some of this
panic. ken auletta's "frenemies" which is about the holding companies and how everybody is dealing with the digital age and the platforms taking on the work themselves. that book, we just don't look classy anymore and you get this sense that advertising used to be this glamorous industry, second only perhaps to hollywood which is why they chose cannes for their annual get together. and that magic is all going away >> and so when you think, though, of the big issue -- the big issue now seems to be the fight, though, between -- do you still think you're in a fight between the publishers on your publishing side of the world and on the social media side of the world? >> no. i think there's a fight about trust. i think it's more fundamental than that. if you look at what's falling apart in our culture, what i'm actually seeing is a revert to trusted media brands and i don't say that lightly because for some time -- and i
straddle the digital world and print world. when you have titles like "good housekeeping" or "town and country," perhaps their age could act against them in fact, you realize these great brands, the oldest magazines in america, have ridden every change in the market they're still with us. they're trusted brands and the value of a media brand and obviously we put nbc in this, is can you stand the test of time? that's what they've done and you see people reverting to the comfort of that knowing that it's really important to stround their brand. >> let me throw a new brand into this apple. apple just bought a company called texture i call it the netflix of magazines. >> it is the netflix of magazines. >> what are they going to do how's that going to change the magazine industry? >> i think it may fundamentally change it. it will expose many more people to some of these great print brands obviously on a digital format i think they'll be working very hard to make mobile first.
which it's not at the moment >> i want to show you a clip quick of evan spiegel who runs snap >> he does thank you for telling me >> he has a pretty interesting comment about the way content -- we should think about content these days can we run that clip for a sec >> if you look at a business like a netflix, they invest a lot into shows to get you to check out or subscribe for us it's content created by your friends that's why it's so important for us to protect that and make sure people feel comfortable expressing themselves. so when you're done checking out your friend's stories, you can scroll down and check out a whole world of content on snap >> so when you think about premium content versus user generated content, who's ultimately going to win? >> well, i don't think it's zero sum. i think that premium content such as the content on the discover platform and hearst has seven titles on it, is a different kind of content to the
intimacy of snap's that evan was referring to there and the one-on-one communication. and think of it in terms of, you know, what was it like when you have a phone call with someone, you don't necessarily want an ad in the middle of the phone call but an ad at the end is acceptable. and they're not zero sum you're a brand, the point is this if you're a brand, you need to be everywhere where your customer is. they're in a million different places so you want select the place where is you think the communication is trustworthy and meaningful >> you're on the board of snap there were articles about this earlier this year. you were paid lower than the other board members. >> that was just bad timing in terms of how it was filed. andrew, look at me do i seem like the kind of person that would accept less than the guys? anybody that's worked with me -- and this is the funny thing. when that original misnomer came out, people called me who'd had to negotiate with me over the
years and they were just laughing they were laughing >> we got to go. but tell everybody you're executive producing a new show >> yes it's on freeform and it's a great celebration of fabulous working women who don't tear each other down, but surprise, surprise pull each other up >> joanna coles, thank you so much >> my pleasure >> she's awesome, andrew we love her. >> we've got a place on the set here >> you're getting applause if you can hear it. >> i think that's applause by my person. >> no. applause from us >> no it's applause back in new york >> oh, good. >> yeah. we want her here in studio and we'll continue this. >> okay. back in new york, we'll continue the conversation >> happy to come on. happy to come on >> she came to play. she's awesome. i like those glasses too more than yours, andrew. >> andrew, we'll see you in a bit. up next, s.e.c. commissioner robert jackson will be our special guest. first, though, check out the futures this morning we've been in the red all morning long you're talking about a decline
right now of the dow futures about 350 points if we were to open here. s&p futures down by 28, the ic0.aq off by 10 stk around jobs will be right back. we have got a problem. a few problems actually. we've got aging roadways, aging power grids, ...aging everything. we also have the age-old problem of bias in the workplace. really... never heard of it. the question is... who's going to fix all of this? an actor? probably not. but you know who can solve it? business. because solving big problems is what business does best.
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commissioner robert jackson. thank you for being here today. >> thanks for having me. glad to be back. >> i want to talk about a recent speech you gave. i'd like you to kind of lay out what you're really coming about to with this you've said recently that when ceos buy back shares, in many cases they are using this as a way to sell their own shares, to boost the market so they can share -- sell the shares they've been given in terms of compensation that's pretty bold accusation. how do you get to that point what's your proof in this? >> just to be clear, it's not an accusation it's a fact. after the trump tax cuts passed, billions upon billions of dollars have been used for shareholder buybacks across the united states. in the speech i gave, i showed that those buybacks are accompanied by at the same time the company buys back shares, the executive sells into the buyback. now, we were clear in the speech that's not necessarily insider trading and fraud, but it is troubling.
when an executive does a buyback, they're suggesting the stock is cheap i'm asking if the stock is cheap, why is the executive sell boog the buyback >> that's a valid question i've been kicking it around to see what i think about the situation. there are so many companies that basically had buyback programs that have run endlessly for years at this point because there were so few other places that executives thought they could go in terms of where to put the company's money. you know, i just wonder if that means they could never sell the shares that they've been given for compensation >> let's be clear about something. executives are going to be paid in stock and there's going to be a time and place for them to sell those shares. the argument that i'm making is that a buyback is not necessarily the right time and place to dump your shares into the market let me say something else. my study is very preliminary, but it's part of a broad academy discussion that's been happening for years about executives'
incentives a top peer review journal, now advising the kingdom's government on buybacks made the same point in a similar study. he said when executives share, they're much more likely to engage in a buyback. look governments around the world are thinking about this question and we should be too >> is that an argument for companies paying executives simply in cash and not giving them stock the reason they give some stock incentive is you want it aligned. i can understand your point if they sell it, they're no longer aligned anyway or is that an argument for a longer holding period? >> you're right. that's an argument for a longer holding period that's why what i did in the speech is call for an open area generally. and the question i want to ask when looking at the buyback rules is are we undermining to manage for the long-term there's a lot of corporate managers out there i don't need to tell you i know they come on this show. they say we're pressured to act in the short-term. my question is if you're feeling
pressured to act in the short-term, then when you do a buyback, why don't you put your money where your mouth is. >> are you going to back this up with hard fast rules or is this just a recommendation at this point? >> what i've done is call for an open comment period on our buy s i want to say something about that i've heard all the arguments we haven't touched our rules in this space for 15 years. and my view it's not good government to leave our rules governing billions upon billions of dollars in stock transactions every year i think we should take a look at the rules now. >> commissioner, i want to thank you for your time today. >> thank you so much when we return, jim cramer live from the new york stock exchange his take on the global market sell-off here are the futures now 330 on the dow jones we'll be right back. this is my headquarters. this is where i trade and manage my portfolio. since i added futures, i have access to the oil markets and gold markets.
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jerk. >> in france they're saying cannes cannes it's like turd or something. >> it's worse. >> cannes. i'm here to interview brian and brad tyler, right? right? >> they're not topless, are they >> no, no. they're all dressed up. >> hey. >> just a second i got to get used to the sun okay >> answer me seriously. >> okay. >> there's a number that would scare me if we were down -- >> 2700 in the s&p >> yeah. something like that. >> no, i like that number. i like that number. >> there's a number where i probably fold a cheap deck of cards. >> like a soup. >> 340 is not it on the dow. >> no. we've had that
look, to me, i don't think anyone talked about it but stocks down 10% in china is that good for the chinese are they sitting there saying ha-ha. they have to support a lot of stocks it costs them a fortune. people said they're going to sell treasuries. so what? we can use a little inflection in the yield curve i'm waiting for something serious to head my way maybe, you know, hey maybe movie time but i'm still waiting for something serious. because right now this is not serious. if they retaliate and decide, listen, apple, young china, $2 on the triple venti cappuccino you can't export anymore that's serious right now the president is saying, you know, guys we import $500 trillion. you take about $500 billion. you take about $100 billion and we got more staying power with you, particularly with your
stock market collapsing. >> i don't want you to change, though i want you to -- >> i'm not changing. their stock market is collapsing there. it's collapsing. how much money do they have to put? they already lost, what, $5 trillion since the peak? how much do they have to prop up they have to prop up more than our guy has to prop up, which is nothing. >> deep down i would love to win a trade war. >> nobody wins a trade war we got to go francis mcdormand is sitting next to me i got to go. >> francis, this is an amazing resurgence in your career, francis. >> it's true and just a few minutes, and coming up on squawk alley don't miss the ceo of hulu live from nn at 11: 15 a.m. you can still stream your favorite shows... yes! ...with no annual contract. wait, what? it's live tv. yes!
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to keep it in perspective talking about a decline probably less than 1.4% however, you're talking about the dow opening at these levels. wiping out their gains for the year for that index. >> the nasdaq is -- >> yeah. it's down by about 94 points but, yes s&p futures down, as well. that does it for us today. make sure you join us tomorrow right now time for "squawk on the street." >> good tuesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber the president asks the trade rep to identify $200 billion in additional tariffs on chinese goods. europe is red. china below 3k for the first time since 2016. flight t